Tesco masterplan? New boss keeps investors and staff guessing

LONDON, Dec 22 (Reuters) - When Phil Clarke was sacked as
Tesco's CEO, senior executives hoped his 0700 strategy
meetings would go with him. They did - new boss Dave Lewis
starts his at 0630.

Parachuted in from Unilever in September, Lewis
soon faced the task of making the shock announcement that a 250
million pound ($391 million) hole had been found in Tesco's
profits, in an accounting scandal that led to the departure of
several senior executives.

Now the CEO - despite having no direct retail experience -
is keeping management on a tight rein and personally taking
charge of key areas of the business, sources say. And as he
conducts a vast review of Tesco's operations to come up with a
strategy to revive its fortunes, he is giving little away - even
to insiders.

The 49-year-old has promised to give some details on Jan. 8
about the measures he plans to take, but all the contents of his
blueprint have not yet even been seen by senior management at
the firm, according to a source close to the situation.

In fact the only member of the leadership team to be
consulted on the new strategy is another newcomer to the firm,
Chief Financial Officer Alan Stewart, the source said.

Key internal talks around financials, customer issues and
products have been kept to separate teams, with all big
decisions taken by Lewis and Stewart, the former finance chief
at Marks & Spencer.

"He tends to operate keeping everything compartmentalised,
so he keeps his own counsel on the masterplan," said the source,
who did not wish to be named. "He doesn't have a core five or
six people that he discusses everything with."

Tesco declined to comment for this story.

Lewis arrived in the worst crisis in the grocer's 95-year
history.

Nicknamed "Drastic Dave" after fixing units of Unilever with
cost cuts and innovative marketing, he will have to show similar
resolve to improve Tesco's competitiveness and strengthen the
balance sheet of the firm which issued its fourth profit warning
in five months two weeks ago.

After two decades of growth, Tesco has lost its way -
distracted by an expensive overseas expansion strategy when it
needed to respond to the rise of discount grocers; and
wrong-footed by a boom in convenience stores and online
shopping.

"IN THE GANG"

Lewis has said there is no quick fix, and favours steady
customer-focused improvements. Price cuts, major asset disposals
and a cash call to fix creaking finances are all options.

His decision to take over temporarily the day-to-day
leadership of the UK operation - whose boss left after the
accounting scandal - is illustrative of his hands-on approach,
punctuated by emails fired off to staff around the clock.

Earlier this month, according to an industry source, he
personally took charge of meetings with Tesco's top 25
suppliers, instead of newly promoted commercial director Jason
Tarry, to the surprise of some attendees.

Incorrectly booking payments from suppliers was at the
centre of the accounting debacle, which is being investigated by
Britain's accounting watchdog and Serious Fraud Office.

With Tesco's share price having halved in a year, the
spotlight is on what it must do to revitalise a business still
the UK market leader but now steadily losing share.

However, company insiders say challenges also lie much
closer to Lewis at his head office in Cheshunt, north of London.

During Clarke's disastrous three-year-and-a-half year
tenure, Tesco's management talent pool was irresponsibly
reduced, according to former company directors.

Lewis now heads a team depleted further still by suspensions
and exits, and retaining talent could be a difficult task.

"Him keeping ... everyone sort of slightly in the dark feeds
uncertainty. Nobody is quite sure whether they are in the gang
or not," the source close to the situation said.

Investors will hope that in his Jan. 8 update Lewis will
ditch the corporate jargon which - despite an army of PR
advisors - has proved a hindrance both internally and
externally.

The Financial Times this month ran a "Dave Lewis
jargon-buster" to help readers decipher phrases such as
"rebasing relationships with suppliers".

Analysts, drawing parallels with Tesco's current plight, say
when Lewis returned to Unilever UK in 2005 it was suffering from
declining market share, had an uncompetitive cost base and a
weak image with customers. Nine years on, it's revitalised.

One unnamed former UK Tesco director, who knows Lewis, said
he was a "formidable" fighter.

"I think he's getting a good grip of things and I think
he'll do a decent job," he told Reuters. "The big issue is how
he sets his stall out for the next two to three years, not the
current focus on profits."